Вы находитесь на странице: 1из 59

Chapter-1 introduction & methodology chapter-2 description

analysis(demography-variables dependent nd independent) percentage

analysis including review of literature chapter-3 feasibility & pilot study how
they prepared questionnaire why? For every questions they have to explain?
Chapter-4 data analysis-compulsory to use any statistical analysis tool
hypothesis-define its tests chapter and statement of the problem

Plastic Money
Plastic money has come of age in the sultanate, with banks offering a wide range
of credit and debit cards to suit every budget, taste and need. Cards for shopping,
cards for fuel, cards for students, cards for the Internet - the world of quick and
easy money began as a convenience extended by financial institutions to those
who wished to take their money a long way, but it has now become indispensable
to the public in Oman.

Indeed, the convenience and rewards offered by these cards were lapped up the
moment they were introduced. As the number and features of these cards grew,
so did the customers' expectations of them. Today, the market is flooded with a
plethora of cards tailor-made for customers, and this has made the choice


In addition to its Visa Electron debit card, BankDhofar has a range of credit cards
that provide financial flexibility, worldwide acceptance, credit limits tailored to
individual needs, photo sign feature for recognition, 24 hours global cash access,
24-hour emergenc assistance and free travel insurance.

Al Noor Interest Free Card: Bank Dhofar is the only bank to have introduced an
interest-free card. The total monthly outstanding or spend is recovered in 12
equal installments including the flat fee.

Bank Dhofar Ecom Card: This card has been designed to make online shopping a
convenient and hassle-free experience for customers. Complete with several
security features, it offers customers the option of choosing their own credit limit,
which can be changed later on, to suit their needs. The minimum monthly
payment is five per cent and the card can be renewed for a fee of RO10.

In addition to their Gold, Platinum and Classic credit cards and picture cards,
BankMuscat has a range of special cards targeting customers of all age groups
and budgets.

Corporate Card/Corporate Executive card: Designed for corporate houses and

senior executives, this card allows organisations to gain better control over
spending and allows employees maximum flexibility and convenience to plan a
travel and entertainment programme. It therefore takes care of a company's
financial needs, while also looking after its employees who are on the move.

Here, companies are given the flexibility to set credit limits for each employee,
within the overall corporate credit extended to the organization by the bank. It
allows cashless transactions as well as facilities for consolidated billing
statements and payments through account debit instructions.

SQU Student card: Issued exclusively to students of Sultan Qaboos University,

this card enables holders to shop worldwide at all outlets accepting Visa cards.
The bank says the idea is to ensure that all SQU students have a convenient
payment instrument and learn effective money management skills.

Prepaid card:
Introduced in association with the Royal Oman Police (ROP), this Visa electron card
can be used to make payments at retail establishments all over the world, withdraw cash
from ATMs, as well as make e-payments at all ROP directories. All nationals and
residents of Oman are eligible to apply for this card, irrespective of whether they have an
account with the bank or not. This card will have to be initially loaded for a payment for
RO11 and then reloaded at any of the bank's branches and cash deposit machines

Basma Rewards Program card:

This 'chip based rewards program' entitles Basma card holders to earn points every time
they make purchases at Oman Oil filling stations, Lulu Hypermarkets and other
participating outlets, irrespective of the mode of payment - cheque or cash. Five points
can be earned for a purchase of RO1 using the Basma card These points can be
redeemed later.

Bank Sohar:
Bank Sohar offers a complete banking experience to its customers, through the various
credit and debit cards it has on offer. Each card comes with distinct features and benefits.
The bank says it uses the latest and most advanced information technology infrastructure
for its card services, which ensures that the customer gets a rewarding banking

Visa Prepaid Card:

The Bank Sohar Visa Prepaid Card is a global card, accepted worldwide for making
payments. This card, preloaded with an amount determined by the customer, can be used
at fuel stations, stores, restaurants, theatres, shopping malls and even online. It can also
be used for cash withdrawals at ATMs.

A highlight of this card is that there are no charges, late fees, or debt accumulations on
the part of the customer. The daily withdrawal limit for the card at ATMs is RO500.

National Bank of Oman (NBO)

The bank, which has several 'firsts' to its credit in the card business, has specific cards
targeting different budget levels. This is in addition to its unique offering of credit and
debit cards. The bank also has the distinction of being the first and only bank to offer the
full credit limit as a cash advance and the first bank to offer credit cards without salary

NBO-Oman Air Co-Branded Credit Card: This card offers customers, discounts on
Oman Air tickets and holiday packages, priority confirmation on Oman Air wait-listed
tickets, free access to the lounge at Muscat International Airport and money back loyalty
points on all transactions.

NBO Webshopper Card: The first 'virtual' card to be launched in Oman, the Webshopper
Card, designed for online transactions, is not embossed and does not have a magnetic
stripe or PIN. This means that the card cannot be used at ATMs or point of sale terminals
at shops. For added security, the card has a lower credit limit and is entirely independent
and additional to, the customer's existing limit on the NBO credit card. All customers of
the bank are eligible to receive the Webshopper Card.

NBO Salary Card:

The Salary Card comes with benefits like cost saving, minimum paperwork, no
minimum balance required, hassle-free banking transactions, and added security against
cash loss and theft. It is a comprehensive payroll management product that offers
practical, cost-efficient solutions that increase the profitability and operating efficiency
of companies with a large workforce.

Oman Arab Bank (OAB)

The bank is not far behind when it comes to offering cards with different features, over
and above its regular offering of debit cards and Gold, Classic and Platinum credit cards.
Most of these 'value' cards are extremely popular and much in demand.

Smart Card/Smart Card Corporate: This offers a unique mode of electronic payment that
allows holders, both individual and corporate, to settle financial dues to both the
government and private sectors. The Smart Card comes with high security and data
protection features, maintains separate accounts in offline and online modes, provides
regular account balance statements to the cardholder and beneficiary, allows instant
deactivation of the card in the case of loss, and even permits individual holders to settle
bills of purchase at many large supermarkets across the country, not to mention filling
stations and other designated stores.

The Smart Card is a 'prepaid card' where the customer loads a certain amount of money
onto the card and uses it till the money runs out. Both customers of the bank, as well as
non-customers, are eligible to acquire a Smart Card. The amount of RO1 is charged for
opening the card.
Kunooz Card: This 'charge' card allows customers to accumulate points for purchases
made at any of the designated shops across the country, including Sultan Centre, Safeer
Hypermarket, Lulu Hypermarket and several big and small restaurants. Three points are
earned for every RO1 spent. When the customer earns a total of 1,000 such points, he
receives a gift voucher of RO25 to be used at the designated shopping centres.

The Blue Kunooz Card for men and the Pink Kunooz Card for women are available only
to customers of the bank. A minimum balance of RO100 needs to be maintained in the
bank's account, to be eligible to receive the card.

Visa Internet Shopping Card: This 'credit' card is for the purpose of online shopping.
The minimum credit limit on the card is RO50 and the maximum RO1,000. An annual
fee of RO12 is charged for the Internet Card and it can be renewed for a period of two
years. The interest rate charged on purchases made with the card is 18 per cent for
ordinary customers, and 13 per cent for VIP customers. All card holders can opt for a
payment percentage of five per cent, ten per cent, 25 per cent, 50 per cent and 100 per
cent on the card, like the other credit cards offered by the bank. A salary transfer letter
from the employer is needed to be able to apply for the card; alternatively a cash margin
or deposit amount equivalent to the card limit is accepted.

Oman International Bank (OIB)

Pioneer in Oman's credit and debit market, it has a diverse selection of cards in addition
to the regular credit and debit cards that address every financial need of the customer.

Visa Cyber Card (Al Mubashar): An exclusive Internet credit card for the purpose of
online purchases, the card cannot be used at ATMs or point of sale terminals at shops.
Eligibility criteria for the card include a minimum monthly income of RO300, as well as
salary transfer to OIB or a cash margin equal to the credit limit desired. The card which
is offered free in the first year comes with features like revolving credit, interest-free
credit for up to 45 days, comprehensive monthly statement, facility to settle the card's
outstanding balance through OIB's phone banking service and a payable minimum of
five per cent of the outstanding balance, subject to a minimum of RO10. After the first
year, the card will be charged at RO10 annually, and is valid for two years.
Visa Business Card:
This card, affiliated with Visa International, is specifically designed for business houses
and corporate clients and comes with a unique 'corporate liability waiver'. This cover
provides indemnity against losses due to acts of fraud or dishonesty by the card holder,
committed in connection with the authorised card issued to them. The card is only issued
to companies having a corporate relationship with the bank and has features like
revolving credit, emergency evacuation/repatriation service up to US$1,000,000,
personal accident cover, travel-related insurance benefits and travel inconvenience
insurance services. The amount of RO25 is levied on the card per annum and the card is
valid for two years.

Problem of Plastic Money

"…Credit card debt relief is about working for oneself and not just for the credit card
debt that you have on you. Yes, it's unfortunate but true. In fact, you can hear statements
like "I have got a better job, now I can pack up my credit card debt even faster". So, in
that sense, credit card debt relief is really about getting your life back on the normal

The most important credit card debt relief comes in the form of de-stressing you.
Everyone knows about the harmful effects of stress; so, if credit card debt relief means
postponing your purchases for later, you should do so.

There are no goods out there that can give you as much joy as credit card debt relief can.
Besides postponing the purchase of your favourite goods, there are few more things that
you need to bring into practice in order to get credit card debt relief. Most of these credit
card debt relief mechanisms advocate restraint spending e.g. preparing a (tight) monthly
budget and sticking to it.

Using cash instead of card for making the payments for your purchases is another advice.
Debt consolidation is another popular way of getting credit card debt relief. You will
find a lot of advice (and you can even hire a consultant) for ways to achieving credit card
debt relief. So, there is no dearth of advice on credit card debt relief or credit card debt
consolidation or credit card debt elimination.

However, what is not so common is the advice on how to act in the post ‘credit card debt
relief' period i.e. after credit card debt elimination. It goes without saying that if you
don't exercise care in the post ‘credit card debt relief' period, you might again fall a prey
to credit card debt.

"…So, if you have been refraining from making purchases, you should not, all of a
sudden, start purchasing all those favorite goods that you had been avoiding. The
recommended guidelines for post ‘credit card debt relief' period are not much different
from the ones for achieving credit card debt relief…" added H. Milla.

Here are the top 5:

1. Plan your expenses using a monthly budget

2. Do not buy anything that you don't need
3. Do not go for too many credit cards (just one or two should be sufficient)
4. Always make full payments of your credit card bill and do it before the due date
5. Never use more than 60-70% of the credit limit available to you.

Advantages of Plastic Money

Plastic Money is a must need of our busy life. Today it is very easy to carry money
without having a lot of cash or gold. Keep Credit or Debit cards and forget the cash
money. This is a new idea of present life-style which has made money transition so easy
that anybody can carry it with him or her in a pocket. Today plastic money is the best
alternative of the cash.

It is also safer to traveling with a plastic money card than cash. If it is stolen you may
contact to bank immediately and can block your money from getting stolen. It gives you
also better option as extra purchasing capacity, protection of money and much more.
Like wise advantage plastic money has disadvantages also. Now we would study of
following advantages as well as disadvantages:


• Purchasing Power: Credit or Debit cards made it easier to purchase things. Now
we don’t have any need to carry hard cash in a large amount. Plastic money is
accepted everywhere, anytime.
• Time Saving: Through a credit card or debit card you can purchase anything from
anywhere without spend money on fare or cash transition. Just provide your card
details to seller store or companies and finalize your order. Now you don’t have
need to worry about time wastes. Use internet for minimum time consuming.

• Extra Safety: While you are not carrying cash, how can it be lost? But if your
card has lost, just contact to your bank or financial institution, which provide you
cards. It will block the account and nobody can draw a single coin without your
permission. So it is 100% safe without any tension.

• Credit Limits: You get an extra amount to spend with your card. This extra spent
money you can return before a fix time schedule or you will have to pay a little
interest. So there is no problem to having less money. Just use money without
any tension and.

• A need of emergencies: Think, that you have no time to go to bank or someone to

get money, what will you do? Definitely you will use your credit or debit card
which will give you confidence for your difficult time. We can say it a true friend
which help us in need.

• Additional features: Mostly credit card offer additional benefits, as discount from
some particular stores, bonus in airline fare, free insurance policies and much
more. This discounts and bonus encourages you to purchase more things as it is
good for us

Now we can see the importance of credit cards and debit cards as plastic money. Plastic
money has made life easier, simpler and fast then before.

Disadvantages Of Plastic Money

Plastic money has become the order of the day. Whether it's a high-end store, a
restaurant, a café outlet or even a grocery shop, people just buy what they like (not just
what they want), proudly taking out their cards and allowing the shopkeeper to swipe
away a fortune of their hard-earned money. You might claim that with plastic money
around, you do not need to carry your cash and there is no fear of being robbed as well.
At the same time, it is easy to use. However, believe it or not, there are a large number of
disadvantages associated with using plastic money. Still, if you use it wisely and
maintain a balance between paper and plastic money, the results can be otherwise. In the
following lines, we have listed the disadvantages of using plastic money.
Cons Of Debit Cards & Credit Cards

Underlying Evils

Though it may look all trendy and flashy to own plastic money (especially credit cards),
you may be surprised to know, owning it is extremely harmful and risky as well. Credits
cards cost much more than other forms of credit, such as a line of credit or a personal
loan, in case you are unable to pay them on time. The transaction charges added to the
amount is much more than you would have anticipated. Also, continuous late payments
damage your credit rating.

Too Much Of Credit

One of the most evident and apparent problems with plastic money, mainly credit cards,
is that it gives you unwanted freedom. As a result, you go on a shopping rampage,
without even once bothering about the consequences. Plastic money allows people to
buildup more debts than what they can handle. While you may be in high spirits after the
recent shopping expedition, be wary that cost may be too much to handle.

Terms & Conditions

Have you heard the phrase 'All that glistens is not gold'? Though debit/credit cards may
have innumerous benefits, most of them usually come with complicated terms and
conditions, which you might not understand or comprehend initially. However, with
time, as you get to know the nuances of these 'dirty' terms and conditions, it might be too

Risk Of Loss & Misuse

The danger of losing a debit/credit card is something, which most card owners' fear.
Though you might start thinking of the world as a good place and people living in it as
angels and seraphs, reality is not all that sweet, especially when you have lost or been
robbed of plastic money. It is seen that hefty purchases are made under the name of the
account holder after the card gets lost or stolen and you end up paying for things, which
you have neither bought nor own.

Limited Options
With so many companies in the market, chances are that the stores that you step in does
not accept card of the particular company you have. Result - you have to either pay a
bulk of cash or just walk out of the shop with no shopping bags (as most of us do not
care to carry cash, because we overtly rely on the credit card).

Less Global Availability

Debit/credit cards also limit global shopping. This is mainly because there are many
companies that do not allow their cards to be used in areas with which they have a
regional conflict. As a result, owning plastic money can be very cumbersome, not to
forget the embarrassment of coming out empty handed, after spending so much of your
time trying the gorgeous outfits.

It's Plastic After All

In the present world, we have become plastic money fanatics. Most of you would agree
that with debit/credit cards in wallets, we do not mind going out without even a single
note in hand. However, remember its plastic after all and susceptible to damage. Due to
constant use, magnetic strips of the cards get worn out. As a result, the card might not
get accepted. If during such times, plastic money is your only source of cash, you can be
in a tricky situation.

Plastic money

When we buy things, we pay for them in lots of different ways. We can hand over cash,
write cheques or use a plastic card such as a debit or credit card.

Quick links to:

• Cards and Cheques

• Chip and PIN

• Protecting your identity (Identity theft)

Plastic cards
Plastic cards are now the most popular way to pay for things. They’re easy to Use, and as
well as using them in shops we use them to pay over the phone or on the Internet. We
also use them to get cash out of the bank.

There are lots of different sorts of plastic cards…

• Cash card. This is the simplest card. You can’t use it in a shop to buy anything.
Instead, it allows you to take money out of a cash machine, and most banks set a
daily limit on what can be withdrawn. See the section on using cash machines on
page 30 for more information.

• Debit card. A debit card lets you use money direct from your bank account
without having to take out cash. You hand it over at the checkout and the money
is taken straight out of your account, providing you give them your Personal
Identification Number (PIN). You can usually use your debit card at cash
machines as well, enabling you to take out cash when you need it. Some
machines charge for using their service, but they will warn you before dispensing
the money.

• Prepaid cash cards. You can use a prepaid cash card in the same places as a credit
card. The difference is that you don’t get a bill. Instead, you load money onto
your card in much the same way that you load credits onto a prepaid mobile
phone. If you lose your card, as long as you report it, you don’t lose the money
loaded onto it. Rented property often has meters which require this sort of card to
pay for electricity or gas. As there is no credit score required when applying for
one of these cards, it means that young people or those usually rejected by card
companies can now get the same discounts as everyone else by buying online.
They are also widely accepted as a form of payment in the UK now.

• Credit card. You use a credit card in the same way that you use a debit card. The
two big differences are that: the money you spend isn’t taken out of your
account; and interest is charged straight away on any cash you withdraw using
your credit card. The credit card company keeps a list of everything you spend
and turns this into a bill, which they usually send at the end of the month or you
can access online. If you don’t pay back all you owe, you get charged interest on
the outstanding amount. That means the amount you owe will get bigger and
bigger. While credit cards are convenient and let us buy things before we actually
have the money to pay for them, it’s easy to get into debt using credit cards.

• Store cards. Some shops have their own cards, called store cards. They are like
credit cards but you can only use them at the shop or store group that has issued
them. You’re often asked if you want to apply for one when you’re paying for
something at the checkout. Most store cards have a very high rate of interest,
which can make your bills mount up quickly if you don’t pay back everything
you owe straight away.

Store loyalty cards and store-linked credit cards can be confusing. It is very
important not to confuse store cards with store-linked credit cards. Store-linked
credit cards can be issued by a high street store for use anywhere and operate in
just the same way as any other credit card, but may have the extra attraction of
gaining you loyalty points if you use this type of credit card in a specific store or
store chain. Loyalty cards do not provide you with any form of credit. A loyalty
card allows you to gather points at a specific store or store chain, which can be
spent on goods or services when enough points have been saved.


When you or your family opens a bank account, you may get a cheque book and cheque
guarantee card to allow you to pay for things without using cash. You can write out a
cheque to the person or business that you are paying and hand over a cheque guarantee
card. This guarantees that they have enough money in your account to pay for what you
are buying. Cheques are now used less and less as plastic cards become more popular
and a faster and safer means of moving money, and the guarantee cards are being phased
out. Many stores, filling stations and other retail outlets no longer accept cheques.

Ex-offenders who are opening new basic bank accounts will not be offered a cheque
book or cheque guarantee card. Details on how to complete a cheque can be found on
this useful interactive site: www.moneymatterstome.co.uk/Interactive-

Chip and PIN

(Personal Identification Number)
These days, plastic cards come with a Personal
Identification Number (PIN). This is a four-digit
number that will be sent to you by your bank, building
society or credit card company. It’s really important to
learn this number rather than carry it about with you or
to change it to a number you will remember. You can
do this at a cash machine. Whatever number you use,
you need to make sure that no one else knows it,
because if they do, they can get hold of your money.

We use a PIN to get cash out of cash machines and for purchases made in places such as
shops and restaurants. You’re asked to put your card into a small machine at the
checkout and punch in your PIN. The ‘Chip’ is a microchip embedded in all cards; it
holds your personal account details. If the card becomes damaged, it will stop working.

The ‘Money Matters to Me’ website has a Chip-and-PIN simulator to help you learn how
to use your cards. You’ll find it at: www.moneymatterstome.co.uk/1-What-money-is-

Cash machines

Cash machines are the machines we use to take money out of our accounts. They are
really called ATMs, which stands for Automated Teller Machines, but most of the time
you hear them called cash machines, cash points or even the ‘hole in the wall’. You find
them set into the wall outside banks and building societies and also in stations, post
offices and supermarkets.

To use a cash machine, you’ll need a plastic card such as

a cash card, debit or credit card and your PIN. Then you
just put your card into the slot in the machine and follow
the instructions on the screen. Some companies charge
you to use their ATMs. A message will be displayed on
the screen and you have a choice to carry on with the
transaction or withdraw your card.

As well as taking out money, you can often do other

things at cash machines such as pay in money, pay bills
and find out how much money is in your account.

Key points to remember

• Don’t stand close to anyone using a cash machine and make sure no one stands
close to you. This is because you need to keep your PIN private.

• Be cautious if strangers offer to help you at a cash machine, even if your card is
stuck or you're having difficulties. Don't allow anyone to distract you.

• Some cash machines charge you for taking out money while others are free. If
you want your money to go further, stick to the free ones.

• If you take cash out using your credit card, you will be charged interest straight
away. With a debit or cash card, as long as you have money in your account, you
won’t be charged interest.

• Ask for a receipt when you take out cash so you can remember how much you’re
spending and have a record of it.

• Always double-check that you haven’t left your card, cash or receipt in the

• Put your money, card and receipt away immediately without drawing attention to
the fact that you are opening your purse or wallet.

• Cash machines sometimes get tampered with by people trying to steal your card
details and money. If the machine looks unusual or suspicious; for instance, if
something has been stuck onto the card slot or key pad, do not use it. If you have
started your transaction cancel it, remove your card and walk away. Do not
remove suspicious devices but do call the police or go into the shop or bank and
let them know what you have found.

To have a go at using a cash machine, visit the ‘Money Matters to Me’ website. It has a
simulator that you can practise with. You’ll find it at:

Protecting your identity

Identity theft happens when someone steals your name and personal information to
commit fraud. They might do this by running up credit card debts in your name or using
your information to take out loans. Unfortunately, it is one of the UK’s fastest growing
crimes. It can cause real problems in our financial lives, particularly for people on low
incomes who don’t have money to fall back on.
There are a number of steps you can take to protect yourself.

• Take care of your personal details, don’t just give them to anyone.
• Rip up or shred personal documents including envelopes that have your name,
address or any personal information on them before you throw them out.

• Don’t give out personal details over the phone, by email or to someone who calls
at the front door unless you are absolutely sure you know who you are dealing

• NEVER give out your PIN to anyone.

• Your bank or building society won’t send you emails asking for personal
information, especially your PIN, so if you receive any, they will be false – delete

• Take special care online.

• If you bank, book tickets or shop over the Internet, do not use the same
passwords for all your accounts or store details on a computer.

• When shopping online look for the padlock icon and https:// (in the web page
addresses) – this means the site is secure. THE LOCK ICON IS NOT JUST A
PICTURE! Click (or double-click) on it to see details of the site’s security. This
is important to know because some fraudulent websites are built with a bar at the
bottom of the web page to imitate the lock icon of your browser. Therefore, it is
necessary to test the functionality built into this lock icon.

Home computers

Ensure your home computer is protected before you go online by buying a good anti-
virus, firewall and anti-spam software package and keep it up to date.

Chip and PIN

Shield your number from those people who are nearby, using your hand or body; don’t
use the same PIN for all your cards; and destroy old plastic cards when you receive new

Check your statements

Bank and credit card statements need careful and regular checking to pick out any
unexpected purchases or withdrawals. Query any strange transactions straight away and
also report these to the police. The bank won’t do this on your behalf, but they will look
into where the money has gone and replace it if fraudulent practice is proved.

Moving house or flat

You are more at risk when you move home so redirect all your mail to your new or a
safe address and inform your bank, utility companies and other organisations of your
new address.

Where is your post delivered?

If you use a central or communal postal-delivery point, such as in a block of flats, make
sure you have a lockable post box and collect your post as soon as possible.

If your mail regularly fails to arrive, report this to Royal Mail, or if a new plastic card is
expected and is not received within a reasonable time contact the issuing company.

Report it

If you are a victim of fraud, report it to the police straight away. They will give you an
incident number. Report a missing or stolen card to your credit card company straight

Check your credit rating

Our section on your credit history explains how to do this.

Managing money
The money coming into your household can come from different places – work or
benefits, or a combination of the two. If you have reached retirement age, the
Government may pay you a pension. This is to cover the basic cost of living if you have
made sufficient National Insurance contributions during your working life. If you would
like to learn more about your State Pension, including a forecast of what you might
expect, you may find this website helpful:
www.direct.gov.uk/en/Pensionsandretirementplanning/index.htm or telephone 0845 7 31
32 33 and ask for a leaflet to be sent to you.

(State Pension age is the earliest age at which you can claim your State Pension. From
2010 the State Pension age for women will increase gradually to 65 to bring it into line
with the State Pension age for men. This reflects women’s changed role in the workplace
in recent years and the fact that people are living longer on average.)

Quick links to:

• Where your money goes

• How to look after your money

• John keeps track of his money - example explained

• Keeping track

• This is what John’s ‘Keeping Track of Your Money Pad’ looks like

Where your money goes

Almost everybody wonders where their money ends up going and it’s easy to see why,
because it gets used for a lot of different things.

Housing and household expenses

As adults, we usually spend money on keeping a roof over our heads. We may be buying
our own home, which usually means we pay some money every month towards the cost
of this purchase (a mortgage). Otherwise we rent. This means that the home we live in
doesn’t belong to us but we pay money (rent) to the owner so that we can live there (this
may be the council, a housing association or private landlord).

Living expenses

Our money also goes on things like buying

food and clothes and paying for telephone
and television bills. We also need it to
travel about, whether that means buying
bus or train tickets or running a car. And
of course we all like having a bit of money
to spend on having fun.


If you do not have much money left at the

end of the month, then you may want to
start to save some on a regular basis. By
doing this, you’ll build up a pot of money that you can spend on something special or
just put by for a rainy day.

Ways to boost your household budget

Wherever and however you live, running a home is expensive. Here are some general
tips that can help you reduce the costs and keep control of your budget.

• Claim all the benefits and tax allowances that you are entitled to. Your local
Jobcentre Plus can help with this. There is also an online ‘benefits adviser’
service which can answer your questions anonymously about your savings,
income and outgoings, to get benefit advice, for you/your family or for someone
else. You can access this from:

• Shop around for services such as gas, electricity and telephones. The companies
providing these services compete with each other to give good deals to
customers, so you may find you can save money by ‘switching’. Your local
library should have Internet access (this may be free) and there is a growing
number of websites that can help make it easy for you to check if you are paying
too much for your services and ensure you get the best deal on most of your

• You can also cut bills by switching to low-energy light bulbs and by turning off
appliances such as TVs and DVD players rather than leaving them on standby.
Also, unplug mobile phone and other chargers from the power supply. If you
leave the charger plugged into the socket but not connected to the phone etc, it
will still consume some energy; consequently, energy is being wasted which soon
mounts up.

• You can’t switch water providers, but you may want to consider having a water
meter installed to help reduce your bills. However, the saving will depend on the
amount of water you use. Check with your local water company to see if this is a
good decision for you. They should install a meter for free, allowing customers to
switch back to the unmetered charge any time within 12 months of installation of
the meter if they are unhappy with the change. If a meter cannot be fitted,
companies may offer an alternative unmeasured tariff which may be lower than
your tariff charge.

• Before you go food shopping, make a shopping list and stick to it. If you do see
special offers or buy-one-get-one-free deals, make sure you don’t buy more than
you need and end up wasting food. It’s also a good idea to look out for cheaper
brands, such as a supermarket’s own brand, which can help you save money.
Remember that ready-made meals and takeaways are usually more expensive
than cooking from scratch.

• Try to give up smoking! 20-a-day costs £2,000 a year.

• Self-employment can bring in extra cash and be rewarding, but seek advice first
to ensure you know what you should do about Income Tax and National
Insurance. Working for yourself might also affect your entitlement to benefits.
Let’s Talk About Self-employment is a useful resource:


If you’re earning wages, you have to pay

Income Tax, which means some of the money
you earn goes straight to the Government. It
is usually taken out of your wages before you
receive them. There are also other taxes that
we have to pay, such as council tax, which is
a local tax that helps pay for things like our
schools, rubbish collection and police service. Most of us have to pay some sort of tax.
It’s an offence not to pay what we owe so it’s a good idea to take some time to find out
more about taxes.

TaxAid is a charity which provides free tax advice to people who cannot afford to pay a
professional adviser. The service is independent and confidential. For advice or an
appointment visit www.taxaid.org.uk. The helpline is open 10am and 12 midday,
Mondays to Thursdays. Telephone: 0845 120 3779

How to look after your money

Most of us have heard stories about people stashing their money under the floorboards or
in their mattresses but there are usually better and safer places to keep money.

Bank and building society accounts

The most common way to manage your money is to put it in a bank or building society.
They’ll open an account for you to keep your money in and you’ll be able to get your
wages or benefits paid straight into the account as well. When you need to spend your
money, you can get it out of the bank as cash or organise for the bank to pay bills by
direct debit for you, which may mean you pay less for some things like gas and
electricity. This is a growing practice, so do ask when dealing with new service

Basic bank or building society accounts

There are lots of different sorts of accounts, and it can be very confusing working out
which sort is right for you. Banks and building societies have rules about what sort of
account they will let you open.
Basic accounts are a good starting point (you may be able to open a basic bank account
whilst you are in prison). These are designed for people who have problems opening
other accounts. This can happen because of a bad record of repaying loans or just
because of a low income.
With a basic account, you get a cash card to withdraw money, but you can only take out
as much money as you have in your account.

(Banks are starting to replace Electron, Maestro and Solo cards with a Visa Debit card,
which you will receive when your account is open, and which should enable you to
spend your money in shops. Some shops do not take Electron or Solo cards; however,
you can use the card for telephone purchases or on the Internet without having to take
out cash.)

You can only spend as much money as you have so you won’t end up with debts. You’ll
also be able to set up direct debits and standing orders, which let you pay things like bills
straight from your account.

As an ex-offender, you can contact any bank or building society. Banks are required by
law to make sure that you are who you say you are so you’ll need to take along some sort
of personal identification. This can be:

• with a photograph – such as a valid passport or new style driving licence; or

• without a photograph – such as a valid old-style driving licence – plus another

document like a benefit book.

You’ll also need to take along proof of where you live. Most banks accept:

• a utility bill in your name such as gas, electricity or water that is less than three
months old; or

• a letter from your landlord or probation office confirming your address.

You will need to go in person to the bank or building society with your identification and
fill out the forms needed to open the account. You should be able to do this in a private
office and get help from a member of staff if you need it. You may have to wait for a day
or two for the bank to make a decision and they will write to you either with your new
account details or a reason why they will not open an account for you.

Letter of Authority
If you already have a bank account and are going away for a while, it’s a good idea to
get someone close to you to sign what’s called a Letter of Authority. This means that
they can get access to your account, perhaps to withdraw money you have left for them
or to look after your account so things like new plastic cards (debit and credit cards) and
statements don’t get sent to your old address. Ask your bank or building society for
advice on this.

Moneymadeclear offers impartial and easy-to-read information and tools, which can help
you work out what’s right for you about a wide range of money-related matters and
products, including basic bank accounts, interest and credit cards. You can speak to an
adviser Monday to Friday – 8am to 8pm (excluding Bank Holidays); Saturday 10am to
6pm – 0300 500 5000 (standard call charges); or if you have access to the Internet, visit

John keeps track of his money - example explained

In the example below, the money coming in on the 30th

is £110 from John’s job, but on the same day he had to
buy a bus pass, which cost £25. This amount has to be
deducted from the £110, leaving £85 to spend.

John spent £50 on food and necessities at the local

supermarket, which needs to be taken away from the
£85, leaving him with £35. His mobile phone needed a
‘top-up’ so he spent £10 on this, leaving him with £25,
which he doesn’t spend that week.

John again earns £110 the next week, which he adds to

the £25 left from last week, which makes £135. John
knows that his electricity bill needs paying and also his
phone will need topping up again, and of course he needs to eat so he takes these
amounts off what he has to spend. Straight away John can begin to see where his money
is going. He knows what he can afford and because he has made a list of all his
outgoings and when they are due he can plan to have money to cover this to avoid debt.
If he can save a little each week, he will have a small nest-egg for emergencies or special
So, week by week he keeps track of money coming in and money going out using this

Keeping track of your money

It often feels as if our money just vanishes so it’s a good idea to learn to keep track of it.
The best way to start to do this is to work out how much money we have coming in. This
tells us how much we have to spend, which is often called our budget. With a budget, the
idea is that you don’t spend more money than you have, so if you have £110 coming in
each week, this is the most you can spend in a week.

Have a go at working out your budget by printing and then filling in the ‘Keeping Track
of Your Money (PDF)’ pad. Make a list of your ‘outgoings’ and add up the total cost. If
the total of your ‘outgoings’ is more than your income, you will need to think about how
you can reduce your ‘outgoings’ or increase your ‘income’. Look at the section on
‘Ways to boost your household budget’ for some more help.

Your ‘outgoings’

Outgoings might include:

• Council Tax

• Food

• Rent or mortgage

• Electricity and/or gas

• Work costs (travel/lunches)

• Water rates

• Telephone

• Clothing

• Transport

• Insurance

• Going out/leisure

If you have any other expenses such as maintenance payments or loans, remember to
include these as well.
Are you claiming all the benefits you are entitled to?

Are you claiming all the benefits you are entitled to? And what about any grants?
For offenders, the discharge Form B79 can help you prove your identity and therefore
claim benefits quickly.
Any grant or benefit will depend on whether you are on:

• remand;

• supervised attendance orders;

• community disposal; and

• home detention curfew (electronically tagged).

Some general tips for you as an offender and your family or career

• You must let the relevant benefit authorities know the date when you are
sentenced, then again the date you are released.

• If you are under 17 you should contact the Connexions or Careers Service when
you are released.

• If you are released without being sentenced to imprisonment or detention you

should receive any arrears of non-means-test benefits to which you are entitled.

• Ensure you have been credited with any National Insurance (NI) contributions to
which you are entitled.

• If you are released following the quashing of a conviction you are entitled to
National Insurance credits for the period you were wrongly imprisoned.

• In some cases your family can claim a benefit which is not available to you. They
are not able to claim for the offender as part of the family either.

Please note, as an offender you may be subject to benefit sanctions if you have been
convicted of two benefit offences in three years. The information in the following table
was right at the time of printing but is subject to change.

What is it? How do I apply? Any other information?

Jobseeker’s A benefit for people Telephone 0800 055 There are two types of
Allowance aged 18 and over if 6688 to make a Jobseekers Allowance –
(JSA) they are not in paid claim. contribution based and
work or are working If there is a income
less than 16 hours a Jobcentre Plus based.
week and looking adviser in your
for work. prison try to arrange
an interview with
them before your
Income A benefit for people By telephone to A person on remand, parole
Support who can’t claim Jobcentre Plus. or sentenced does need to
(IS) Jobseekers 0800 055 6688. check if they COUNT. A
Allowance (JSA) prisoner is not a member of
because they are not the family for IS purposes. If
able to look for you are a prisoner, your
work. This could be partner can claim benefit as a
if you are a lone single person or lone parent.
parent responsible If your partner or child is a
for a child under 12 prisoner, you can no longer
years of age, or a claim IS for him/her. As IS is
carer. generally paid in arrears you
If you COUNT as a may need to apply for an
prisoner you are not interim payment or Social
entitled to IS apart Fund Crisis Loan to meet
from housing costs your initial expenses.
which are payable
for up to 52 weeks
whilst you are on
remand, awaiting
trial or
Housing If you are serving a If you are no longer entitled
Benefit custodial sentence to IS or income-based JSA
(HB) you are entitled to you will need to make a new
HB for up to 13 claim for HB.
weeks as long as If you are no longer entitled
your absence from to HB your partner or other
home is unlikely to person occupying your home
exceed 13 weeks. If may be able to claim benefit
you are serving a as a liable person. A prisoner
sentence of more continues to count as a
than 13 weeks you member of the claimant’s
may still be entitled family as long as s/he is
to HB if you are unlikely to be away for
expected to be substantially longer than 52
released within 123 weeks. Nondependent
weeks. This may deductions are not made in
also include being respect of a non-dependant
released early under who is a prisoner.
home detention
curfew (electronic
You are treated as
serving a custodial
sentence during
periods of temporary
release (unless you
are released under an
intermittent custody
order). These
therefore count
towards the 13
weeks for which HB
is payable. Also you
can continue to
receive HB for up to
four weeks if you
still have to pay rent
and you could not
reasonably have
avoided doing so.
Discharge If you have been in Your prison should If you need to pay housing
Grant prison for 15 days or give you a form costs in advance, an extra £50
more you will get a about two weeks may be available – it will be
discharge grant on before release to sent direct to the landlord
release. sign to get the grant. (speak to your personal
officer or a member of the
resettlement team). This
counts as capital for
IS/income-based JSA
purposes, i.e. it is not in
addition to IS/JSA
Community A grant for items You can apply to You are not automatically
Care Grant like Jobcentre Plus up to entitled to this and if there
(CCG) furniture, household 6 weeks before your isn’t enough money you will
equipment and release date, as long be turned down (first come,
clothing (but not as you will be first served). You can apply
clothes for claiming IS or for CCG if you are or expect
interviews or work). income-based JSA to be in receipt of IS or
If you are released on release. income-based JSA.
on temporary licence
somebody caring for
you can claim CCG
for living expenses.
Crisis You may be able to Claims will You will need to pay this
Loan get this if your generally be back. It is again dependent on
Discharge Grant has taken over the the funds available at the time
run out and you are telephone; contact of your application. The
waiting for benefits. your local Jobcentre maximum value of a crisis
for the telephone loan award is £1,500.
number for your
Child Tax A means-tested tax HM Revenue & The amount paid depends on
Credit credit to support Customs deals with the number of children you
families with this. It is paid on top have and your household
children. of child benefit. You income. You can claim
call the Tax Credit whether or not you are in
Helpline on 0845 work. There are extra
300 3900 to get a amounts for children who
claim form and to have a disability.
get further
information. You
claim Child Tax
Credit and Working
Tax Credit on the
same claim form.
Working A means-tested tax HM Revenue & The amount paid depends on
Tax credit for working Customs deals with the number of children you
Credit adults on low this. It is paid on top have and your household
incomes, including of child benefit. You income. You can claim
those who do not call the Tax Credit whether or not you are in
have children. Helpline on 0845 work. There are extra
300 3900 to get a amounts for children who
claim form and to have a disability.
get further
information. You
claim Working Tax
Credit and Working
Tax Credit on the
same claim form.
Pension Pension credit is for You can apply over You are no longer treated as a
Credit people aged 60* and the phone by calling member of a couple if you or
over who are living 0800 991 234. You your partner is in prison.
in Great Britain. It will need to give
could top up your them your National
weekly income to a Insurance number.
uaranteed minimum
level. If you are 65
and over and have
saved towards your
retirement you could
receive extra money

If you are a prisoner

you are NOT
entitled to the
guarantee credit or
the savings credit. If
you are on remand
awaiting trial or
sentence, you are
entitled to housing
costs for up to 52
weeks and you may
be entitled to arrears
of the severe
disability addition if
you do not receive a
sentence of
imprisonment and
you are awarded
arrears of attendance
allowance or
disability living

*The age you can

get Pension Credit
will rise from 60 to
65 by 2020. It’s
linked to the changes
to women’s State
Pension age.
Saving money
Saving money on a low income is difficult, but
even by saving the odd 50 pence your savings can
soon mount up. You can save money in an old
jam jar if you like, but it’s a good idea to think
about the benefits of saving in a more formal way.
Your money will be safer and you won’t be so
tempted to ‘borrow’ it. The amount you have
should also grow because the bank or building
society will give you interest. That means
they’ll give you a bit of extra money as a reward
for saving with them. See our section on
Understanding interest rates on page 26 for more
on this.

You can open a savings account at a building society, bank or through the Post Office.
Or you could choose to save with a credit union.

Credit unions

Credit unions are great for people on low incomes. They are financial organisations run
in the community by the community. They offer a place to save your money as well as
providing low-cost loans.

You have to become a member of a credit union. Each one tends to have conditions of
membership; for example you have to live or work in a particular area. Once you’re a
member, you save your money with the credit union and, in return, you get what is
known as a dividend. This is an extra sum of money, like interest, that is usually paid to
you once a year, so it will help your savings grow. The paying of a dividend is not
guaranteed and is dependent on the year’s profits for the individual union.

Many credit unions now offer a range of services, including a current account, benefits
direct and money advice.

For more information on credit unions, you can contact the Association of British Credit
Telephone: 0161 832 3694

Planning for the unexpected

Even if we’re really good at sticking

to a budget, life has a way of
throwing up things that we weren’t
expecting. For example something
might need to be replaced or repaired.
We may have to spend extra money
because of an emergency. Any of
these can cause problems for your
budget. That is why it makes sense to try to save up a bit of money rather than spend
everything we have. It’s also important to think about the extra money we usually end up
spending at times like Christmas, birthdays and holidays.

What happens when you lose control of your spending?

If you spend more money than you have, you end up getting into debt. This means that
you owe someone else the money you’ve spent. It may be a friend you’ve borrowed
money from or perhaps a catalogue company or your bank. You can also run up debts by
not paying for the things you’re supposed to, for example your tax or rent.

Unfortunately, if you get into debt and don’t pay back what you owe, your debt tends to
get bigger, even if you stop adding to it. This happens in lots of different ways. You may
get a fine for not paying for something on time and this will be added to the original
amount you owe. You’ll also probably be charged interest on the money you owe. This
means that whoever has lent you money will charge you some extra money for
borrowing it. The longer you go without paying it back, the more interest they’ll add to
the original amount you borrowed.

Interest rates
When we’re talking about money, the word ‘interest’ usually crops up in two different
places. You hear people talking about the amount of interest they have earned on savings
and also how their debts are growing because of interest.

But what exactly is interest?

Well, a good way to understand it is like this. The money in a bank or building society
doesn’t just sit there. What you and other customers are doing is actually lending your
money to the bank or building society to fund their activities. In return for this, they pay
you an extra bit of money, which we call interest. How much interest you earn depends
on where you put your money and how long you save it for.

At the other end of the scale, if you borrow money, whoever you’re borrowing it from
usually charges you interest in exchange for lending you the money. They tend to do this
because they want to make a profit on their money and because there’s always some risk
involved in lending people money. Out of the people you know, think about who you’d
trust to pay you back if you lent them some money. Some would be sure to pay you back
promptly while others would vanish forever, taking your money with them. Companies
lending money face the same situation. You’ll find that if you haven’t paid back money
in the past, you’re likely either to be turned down when you ask to borrow money or
charged a lot of interest. Not understanding about interest and how it piles up is one of
the easiest ways to get into debt. Unfortunately, working out how interest is charged is

When we talk about how much interest we’re being charged, we usually talk about it as a
percentage of the amount we’ve borrowed. For example, we may say we’ve borrowed
£1,000 at an interest rate of 10%. This means as well as paying back the original £1,000,
we need to pay back another 10% on top of that, which works out as £100.
Unfortunately, working out how much interest you’ll be paying isn’t as easy as this
because of something called compound interest.

Compound interest

Compound Interest means that as well as paying back interest on the original amount
you borrowed, you also have to pay interest on the interest that has already built up. This
means that the longer you have your debts the more they grow.

APR (Annual Percentage Rate)

If you’re borrowing money, you’ll come across the letters APR. This stands for Annual
Percentage Rate. Anyone officially lending you money has to tell you what their APR is.
They work this out by adding together the interest you’ll be charged over a year plus any
extra costs such as arrangement fees. The idea behind APRs is that they make it easier
for you to compare the cost of borrowing. For example, one company might have an
APR of 5% while another has one of 10%. (The lower the APR, the better.)
AER (Annual Equivalent Rate)

If you’re saving money, the letters you’ll come across are AER. This stands for Annual
Equivalent Rate. This shows how much interest you’d get if you put some money into an
account and left it there for a year. Again, using AERs, you can work out which bank or
building society will help your savings grow fastest. (The higher the AER, the better.)

The ‘Money Matters to Me’ website has a couple of calculators that can help you
understand interest when talking about something you want to buy or save.

Credit history
If you want to open a bank account, take out a credit card or borrow money in general,
the company you borrow from will want to know a bit about you so they can decide if
they should lend to you or not. To make this decision, they look at your credit history.
This is made up of information about money you have borrowed and how you have paid
accounts in the past. It usually includes information from the past six years and is held
by companies called credit reference agencies. The agencies get this information from a
number of places, including:

• public records such as the electoral roll or listings of bankruptcies and court

• financial information supplied by banks, credit card companies and so on.

Looking at your own credit reference file

Your credit reference file is made up of

important information about you and, by
law, a company has to ask your permission
to look at it. They usually do this on the
application form when you are applying for
a card, account or loan. You are also
allowed to see your file. To do this, you
need to write to the credit reference
agencies asking for what is known as your
‘statutory credit report’.

Some agencies charge about £2.00 for this service.

You can have your own credit report sent to you direct. There are a number of
companies who offer a free service and some offer a service that offenders can access
whilst serving their sentence – speak to the Citizens Advice advisers, personal or
probation officers about this.

There are simple forms which will require some personal information about yourself,
including previous addresses.

Why would I want to see my file?

There are a number of reasons why people ask to see their files.

• If you are thinking of applying for something like a loan or credit card, it can be
helpful to know what your file says about you.

• If you have applied for some sort of credit and been turned down, your credit
reference file will help you understand why.

• By knowing what your file says about you, you can start to take any necessary
steps to repair your financial record, for example, by paying back debts. This is a
useful review process for all adults, but it would give you the offender the
opportunity of getting your financial ‘store’ in order before release, as debts don’t
disappear while you are in prison.

• Information held by credit reference agencies can sometimes be wrong. By

looking at your file, you can make sure that companies are basing their decisions
on the right information.

Use of plastic money on rise - July 24th, 2007

There are about 22 million credit cards in India (as on January 2007). And the total value
of such transactions almost doubled between 2003-04 and 2005-06, to around Rs 33,900

The latest available data, which covers the first 10 months of 2006-07, indicates
continued robust growth, in the number of credit cards increasing at 28% year-on-year.
Over the same period, the value of credit card transactions grew by 20%.
But, the number of credit cards in India - 22 million - is tiny for a country with a
population exceeding 1.1 billion.

Since many people have multiple cards, the number of cardholders is much smaller than
the number of cards in circulation.

Credit card issuers in India have plenty of room to expand their customer bases
aggressively over the next few years.

Best Ways To Use Plastic Money For Your

Holiday Shopping

In the holiday season when shopping is your main activity, you’d most probably want to
use plastic money rather than cash to purchase goods. But using plastic money to your
best advantage is an art. It all depends on how you play your cards …oops how you use
your cards, I mean! If you know how to cleverly use your credit cards and store cards to
your best advantage, you’ll be able to save up a lot of your hard earned money. But if
you are unwise in using these cards, you’ll only end up in huge debt. Here are some
ways in which you can carry out your holiday shopping to your advantage using plastic
People with different kinds of financial and credit card profiles go for shopping. You
have to assess your type and find out what you should do to enhance your profile.
Generally people make the mistake of following the advice of friends and relatives on
credit card usage without considering their own unique situation. As a result they flunk
in their endeavors and blame the formulators of the strategies for coming up with
ineffective solutions. But the fault lies with our implication and not with the strategies.

Maintaining a Good Credit Score

If you are trying to keep up a good credit score, one way to achieve it is to not use
multiple cards for making your purchases even though you possess them. Use only the
card with the maximum credit limit for making your purchases. Using multiple cards
involves multiple credit enquiries which will lower your score temporarily. Also make
sure that you make timely payments of your money because otherwise you’ll be
spending a lot of money on the high interest rates levied upon you for late payments.

Paying Off Debt in the Shortest Time

If you want to clear off your credit card debt in the shortest period of time select a card
with the lowest APR and credit availability. Clearing off your debt in a short time will
help you in maintaining a good credit score. If your holiday expenditure adds up to the
already existing credit debt, your score might suffer a dip if you don’t make timely
payments. This will increase your interest rates very rapidly.
Use debit cards if your credit cards are already used to their highest potential. Keep an
eye on your balance account so that you do not land up with overdraft penalties. Make
signed purchases so that your credit card company, such as Mastercard or Visa, gives
you benefits on such purchases.

Maximizing the Rewards Facility of Credit Cards

If you are type of person who wants to leverage the best of reward benefits offered on
your credit card you can make your holiday purchases using the reward card only.
Reward cards are best suited to people who do not intend to debt huge amounts on their
credit cards and also those who punctually make credit card payments without delay
each month.

You can also avail the discount and holiday perks offered by many credit card

These are some of the ways in which you can maximize the perks offered by the credit
cards to your best advantage.

Do you know about the different types of plastic money available in the market today?
Be it credit cards, debit cards, add-on cards, charge cards, co-branded cards, affinity
cards or Diners Club cards. More and more Indians are using them as a convenient mode
of payment.

Here is an FAQ on the most popular plastic cards used in India [ Images ].

What is a credit card?

A credit card is plastic money that is used to pay for products and services at over 20
million locations around the world. All you need to do is produce the card and sign a
charge slip to pay for your purchases. The institution which issues the card makes the
payment to the outlet on your behalf; you will pay this 'loan' back to the institution at a
later date.

What is a debit card?

Debit cards are substitutes for cash or check payments, much the same way that credit
cards are. However, banks only issue them to you if you hold an account with them.
When a debit card is used to make a payment, the total amount charged is instantly
reduced from your bank balance.

• Don't borrow on your credit card! Here's why

A debit card is only accepted at outlets with electronic swipe-machines that can check
and deduct amounts from your bank balance online.

What is a charge card?

A charge card carries all the features of credit cards. However, after using a charge card
you will have to pay off the entire amount billed, by the due date. If you fail to do so,
you are likely to be considered a defaulter and will usually have to pay up a steep late
payment charge.

When you use a credit card you are not declared a defaulter even if you miss your due
date. A 2.95 per cent late payment fees (this differs from one bank to another) is levied
in your next billing statement.

What is an Amex card?

Amex stands for American Express and is one of the well-known charge cards. This card
has its own merchant establishment tie-ups and does not depend on the network of
MasterCard or Visa.

• Credit cards: Remember these dos and don'ts

This card is typically meant for high-income group categories and companies and may
not be acceptable at many outlets. There are a wide variety of special privileges offered
to Amex cardholders.

What are MasterCard and Visa?

MasterCard and Visa are global non-profit organisations dedicated to promote the
growth of the card business across the world. They have built a vast network of merchant
establishments so that customers world-wide may use their respective credit cards to
make various purchases.

What is a smart card?

A smart card contains an electronic chip which is used to store cash. This is most useful
when you have to pay for small purchases, for example bus fares and coffee. No
identification, signature or payment authorisation is required for using this card.

The exact amount of purchase is deducted from the smart card during payment and is
collected by smart card reading machines. No change is given. Currently this product is
available only in very developed countries like the United States and is being used only
sporadically in India.

What is the Diners Club card?

Diners Club is a branded charge card. There are a wide variety of special privileges
offered to the Diners Club cardholder. For instance, as a cardholder you can set your
own spending limit. Besides, the card has its own merchant establishment tie-ups and
does not depend on the network of MasterCard or Visa.

However, since this card is typically meant for high-income group categories, it may not
be acceptable at many outlets. It would be a good idea to check whether a member
establishment does accept the card or not in advance.

What is a photo card?

If your photograph is imprinted on a card, then you have what is known as a photo card.
Doing this helps identify the user of the credit card and is therefore considered safer.
Besides, in many cases, your photo card can function as your identity card as well.

What is a global card?

Global cards allow you the flexibility and convenience of using a credit card rather than
cash or travellers checks while travelling abroad for either business or personal reasons.

What is a co-branded card?

Co-branded cards are credit cards issued by card companies that have tied up with a
popular brand for the purpose of offering certain exclusive benefits to the consumer.

• A debit card with a difference

For example, the Citi-Times card gives you all the benefits of a Citibank credit card
along with a special discount on Times Music cassettes, free entry to Times Music
events, etc.

What is an affinity card?

The card issuer ties up with popular organisations/ institutions which are often non-profit
organisations (Citi-WWF card or the Stanchart-Cricket cards) to offer an affinity card.
When the card is used, a certain percentage is contributed to the organisation /institution
by the card issuer.

What is an add-on card?

An add-on card allows you to apply for an additional credit card within the overall credit
limit. You can apply for this card in the name of family members like your father/
mother/ spouse/ brother/ sister/ all children above 18 years of age. Your billing statement
would reflect the details of purchases made using the add-on card. You are liable to
make good all the payments for the purchases made using the add-on card(s).
How many add-on cards can a customer get?

Normally an issuing bank permits two add-on cards per credit card.

Is it possible to control the spending limit on add-on cards?

Yes. Some credit card issuing companies do set a limit for each transaction, as well as
for the total value of transactions allowed on a particular add-on card every month.



“Charge it!” has become like a fashion statement and it is commonly heard in various
service establishments like malls, multiplexes and hyper markets. People buying food or
shopping for clothes using their credit cards has now become a trend. A credit card is
supposed to be used for necessities and not as a luxury.

• Before marching down to a credit card agent, ask yourself some questions like do you
want to pay for the credit every month or carry a balance instead? The type of credit
limit should also be taken into consideration. Some credit cards offer a lot of benefit
packages, think of the package that would suit your needs.

• If you want to carry on a balance, look for the credit card that offers the best interest
rate or the annual fee offer. However, if you prefer to pay for the credit every month,
then look on the one that offers the lowest interest rate.

• Credit limit determines how far you can go with your card. Think of the lowest limit
that would fit your needs, not your lifestyle.

• Credit card companies offer tremendous bonuses on their cards. Before you sign up for
these packages, think wisely! Will they really benefit you or are they just there to make
your credit life miserable?

• Always choose the credit card that offers the lowest annual percentage rate (APR).
APR's could either be a ‘fixed’ or a ‘variable’ rate. This is to be taken into consideration
if you're deciding on carrying a balance.

• Some credit cards offer a grace period of 25 days before they charge the interest on the
purchase. But some of them may not. Look for those that have one. The longer the grace
period, the better the deal.

• You also have to check on other fees attached to the credit card. These are the penalty
rates as well as other charges like over the limit charges and late payment charges.

When choosing a card, always remember to get the one that would best fit your needs
and at the same time the best deal you could get out of it on a long term basis. You are
only to get one so don't rush into one that looks good. You always have the liberty of
comparing one credit card to another.


All credit card users must be familiar with the jargon associated with a credit card like
limit, debt, secure, and unsecure. For people to whom a credit card is a new way of life,
let us find out the basics of a credit card.

It is always a good idea to do a proper study before one goes in for a new credit card.
With the kind of offers and promotions offered by the banks of today, it has certainly
become a task for one to choose the card that would suit him just right.

An unsecured credit card refuses to a free and clear credit card that does not require a
deposit and is definitely not a prepaid card. An unsecure credit card also implies that one
has a fine credit statement, as one need not pay in advance for the use of such card.
Though the credit limit offered initially would be lower, it would gradually increase as
per the use of one's card.

A difficulty in securing an unsecure credit card is past credit fiascos. One can recover his
credit by making regular payments and purchases on a secured card.

A credit card application is the way with which one can have plastic money in hand. By
providing one's credit history, work history, and banking information, one allows the
givers to dig into his credit record. Once an approval is made and the credit limit is set,
the card is all ready to be swiped.

As we wind up this article, let us also keep in mind that using a card has a tagline called
responsibility. Credit cards have caused people to overspend; yet with proper
management, it could turn out to be your best money lender.


The origin of the credit card can be traced back to 1914, when American company
Western Union began issuing metal plates to customers who would buy on credit. The
transactions would be recorded on these plates.

However, the credit card as we know it took another 40-odd years to evolve. An
American gentleman, Frank McNamara was acutely embarrassed in a New York
restaurant, when he realised that he had forgotten to carry his wallet. When he finally got
out of the restaurant --- after plenty of apologising --- McNamara was suddenly struck by
the idea of replacing cash with a more convenient alternative. And that’s how “The
Diners Club” card was born. So now you know who to thank --- or blame!


Tosum it in a line, a credit card provides you with convenience, safety, more purchasing
power and a host of fringe benefits. What’s more, credit cards to day have assumed
different avatars. You have Add-on cards (for a family member), ATMcards (to
withdraw instant money), co-branded cards, petrol cards (Citibank+IndianOil, for
instance in India) debit cards, smart cards ---- the innovations are end less. You get more
too. Most cards offer privileges like free insurance, discount coupons and invitations to
exclusive events. Yes, for many the creditcard is become a vital necessity. If you
haven’t got one yet, go for it by all means. But read more in this section on how not to
misuse your credit card andget into financial trouble.


Most cards today offer personal accident insurance cover as a value-added service once
you subscribe. Of course the value and scope of the insurance is different for each card.
A few cards (in India) offer up to Rs 10 lakh of insurance, and what’s more they cover
your spouse too. So before going inform your card, you’d do well to check out what each
card company is offering in terms of insurance. Remember too that the card company is
offering the insurance in a tie up with an insurance company. That means the
responsibility of honouring the commitment made is not with the card company but with
the insurance firm. So check whether the card company has tied up with a reputed
insurance firm.

It’s not only accident insurance that’s on offer. Some credit card firms also provide
medical and household insurance too.

Why We Use Plastic Money

These days our credit cards allow us to buy whatever we want
whenever we want. This is such a change from some years ago when we had
to first check whether cards were accepted. Everything seems to have
undergone a sea change.

Today everybody from retailers to lenders to aircraft carriers accept

credit cards. Attitudes to the credit card have also changed a great deal.
Whereas people at one time tended to not use the card. That is no longer the
case . The people of today prefer to ss

These days, our credit cards allow us to buy whatever we want, whenever we want. This
is such a change from some years ago when we had to first check whether cards were
accepted. Everything seems to have undergone a sea change.

Today, everybody, from retailers to lenders to aircraft carriers, accept credit cards.
Attitudes to the credit card have also changed a great deal. Whereas people at one time
tended to not use the card, that is no longer the case. The people of today prefer to whip
out there cards as soon as bill paying time arrives. A swipe and a sign is all it takes, and
one can walk home with the bill and the stuff to go with it.

Credit cards are so much easier to carry than cash that it is quite typical that the former is
taking over as the most preferred mode of payment. A credit card occupies very
negligible space in our wallets, and yet, it can purchase so much for us. Paying by credit
card is also a good way of keeping tabs on what we are spending our money on.

While making cash payments, it does become a little hard to keep a track of anything but
the largest bills. But in the case of credit cards, osur credit card slips and our monthly
statements clearly tell us how we have been spending our money.

Moreover, it is becoming almost too easy to get credit cards these days. I constantly have
cold callers phoning me to give me "a great new credit card deal". Salespersons
occasionally walk into our office offering discounts if a group of people decides to get
that credit card immediately. Why, credit card vendors even put up stalls at strategic
locations and these also help get more customers.
However, the ease with which we can get credit cards can be one of the disadvantages.
Nowadays, we always run the risk of landing up with a card that is of no use. When the
terms seem to be too easy, we should ensure that we read the fine print carefully.

Before availing of a credit card, it is necessary to understand the benefits and the risks.
Often enough, a credit card may seem to offer a great deal, but there may be some
disadvantages that one is overlooking. The only way to tackle this is to ensure that we
complete our research before we go credit card hunting. Then we should easily find
some great deals...

Future of plastic money in india?


Starting from 'Diners Club', some 50 years ago, the card industry has been growing with
a rapid pace world over and so has been the growth in the domestic card industry. With
only two players in domestic card industry, HSBC and Citibank in the early 80s, the
number swelled to over 25 in the year 2001. Credit cards in India, made their debut in
1981, and are on the verge of an unprecedented boom. Between 1987 and 2001, the
market has virtually grown to over 4 million cards with over 25-30% of compounded
annual growth in new cardholders base.

Its not that only the card numbers have increased, but even the types of cards on offer
have seen a surge. Today the domestic card industry is flooded with different types of
cards ranging from gold, silver, global, co-branded credit cards, smart to secure, ….the
list is endless. Foreign banks have shouldered the major responsibility of increasing the
card base and adding value-added services to the card products in the past. This is also
evident from the fact that the market share of these foreign banks is estimated to be well
over 70%. But the scenario has changed dramatically in the last of couple of years with
the entry of State Bank of India (SBI), a domestic major in the banking sector. More and
more nationalised banks and private sector banks like ICICI and HDFC Bank are
aggressively launching credit card with value added features.

There is immense growth potential in the domestic card industry. A glance at the Indian
population reveals that India's middle/upper middle class (target segment) represents a
population of over 10 m. There are only 2 to 3 m cardholders, each possessing an
average of 2 cards. This is a very low figure given India's huge middle to upper class
population. There is no doubt that the domestic card industry has to yet to mature and
offers significant long-term growth potential.

Given the lack of maturity of the domestic card industry, its growth will depend upon
building core retail business, with more sophisticated products. In the expansion of
domestic credit card market, the existing foreign players, SBI, other nationalised banks
and the new domestic private sector banks are expected to play important role with
complementary strategies.

Foreign banks with the advantage of technology and industry experience are expected to
concentrate on increasing card spending and customer loyalty in the major cities. SBI, on
the other hand is expected to capitalize its superior distribution network to expand card
acceptance in the smaller towns. The new private sector banks would have the
opportunity to capture significant market share by combining the strengths of foreign
banks and nationalised bank like SBI.

Although at present the card market is mainly limited to India's relatively bigger cities
and tourist locations only, there is also a potential in smaller cities. Domestic banks,
owing to their vast network and reach to smaller cities, can easily tap this potential. They
would be better off, penetrating into smaller cities and bringing credit card to the masses
rather than cannibalising other foreign banks' existing cardholder base.

The efforts of these banks to increase the card base is going to be wholeheartedly
supported by the residents of these smaller cities with their higher disposable income,
changing lifestyle, increasing travel and the growth in the entertainment sector.

Why Cut Trees, Use Plastic Money

Looking at the pace we are growing with our

population, one would wonder how long we
could sustain by felling trees to produce paper
currency notes in India? Sometimes I shudder
to think of such questions which does not have
immediate answers and we still continue to
deplete those resources.

As I certainly appreciate the invention of

currency made of paper instead of coins. Just
imagine if we still had coins in vogue, a
corporate employee or a businessman carrying
a gunny bag full of coins as his pay check to home. What a hard work let alone earning
but to take it home.

India is earliest one to start coins in the history and Bank Of Hindustan might have been
the first known bank from 17th century, but I feel we did not progress much after that as
pioneers to show the world an alternate form for paper currency. Why cannot we use
polymer as an alternate material, which Australia has successfully started using it.
Australia is first one to use polymer for making currency, which is called as plastic

Using paper may not be an immediate threat for rest of the western countries if this is
what India following. But its certainly going to pose an issue for India very soon with
depleting forest reserves. Government mulled over using Polymer early this year but it
did not make any headway after that.
Couple of advantages of using Polymer:

• Difficult to counterfeit the currency notes

• Easy to recycle

• High durability when compared to paper currency

I also wonder why do we print such long notes wasting more paper and material used. If
I compare our 100-rupee denomination with any Euro, Pound or Dollar, it certainly looks
bigger consuming more material. Why could not we have small notes printed thereby at
least saving resources for some more time until we implement alternatives.

Concept of Plastic Money

Credit cards in India is gaining ground. A number of banks in India are

encouraging people to use credit card. The concept of credit card was used in
1950 with the launch of charge cards in USA by Diners Club and American
Express. Credit card however became more popular with use of magnetic strip in

Credit card in India became popular with the introduction of foreign banks in the

Credit cards are financial instruments, which can be used more than once to
borrow money or buy products and services on credit. Basically banks, retail
stores and other businesses issue these.

Major Banks issuing Credit Card in India

• State Bank of India credit card (SBI credit card)

• Bank of Baroda credit card or BoB credit card
• ICICI credit card
• HDFC credit card
• IDBI credit card
• ABN AMRO credit card
• Standard Chartered credit card
• HSBC credit card
• Citibank Credit Card

Precautions taken after receiving credit card

To Avoid:
• Bending the Card.

• Exposure to electronic devices and gadgets.

• Direct exposure to sunlight.

• Be cautious about disclosing your account number over the phone unless
you know you're dealing with a reputable company.

• Never put your account number on the outside of an envelope or on a


• Draw a line through blank spaces on charge or debit slips above the total
so the amount cannot be changed.

• Don't sign a blank charge or debit slip.

• Tear up carbons and save your receipts to check against your monthly

• Cut up old cards - cutting through the account number - before disposing
of them.

• Open monthly statements promptly and compare them with your receipts.
Report mistakes or discrepancies as soon as possible to the special
address listed on your statement for inquiries. Under the FCBA (credit
cards) and the EFTA (ATM or debit cards), the card issuer must
investigate errors reported to them within 60 days of the date your
statement was mailed to you.

• Keep a record - in a safe place separate from your cards - of your account
numbers, expiration dates, and the telephone numbers of each card
issuer so you can report a loss quickly.

• Carry only those cards that you anticipate you'll need.

To Do:
• Please sign on the signature panel on the reverse of the Card
immediately with a non-erasable ball-point pen (preferably in black ink).
This will ensure that the benefits of membership are yours and yours
• Keep the Card in a prominent place in your wallet. You will notice if it is

Reasons credit card being rejected at retail outlet:

• One may have exceeded the borrowing limit or defaulted (constantly) on
minimum payment due.

• The Card is hotlisted.

• The card has crossed its expiration date.

• Non-receipt of dues of one-card blocks future transactions on any other

card(s) held of the same card-issuing bank.

• The magnetic stripe on the reverse of the card is damaged i.e. has been
scratched or exposed to continuous heat/direct sunlight or magnetic field-
like card kept near a TV set / other electronic appliances.

• Systems or technology failures have in rare instances also led to non

acceptance of cards when swiped through an Electronic Terminal.

Global player in credit card market


MasterCard is a product of MasterCard International and along with VISA are

distributed by financial institutions around the world. Cardholders borrow money
against a line of credit and pay it back with interest if the balance is carried over
from month to month. Its products are issued by 23,000 financial institutions in
220 countries and territories. In 1998, it had almost 700 million cards in
circulation, whose users spent $650 billion in more than 16.2 million locations.


VISA cards is a product of VISA USA and along with MasterCard is distributed
by financial institutions around the world. A VISA cardholder borrows money
against a credit line and repays the money with interest if the balance is carried
over from month to month in a revolving line of credit. Nearly 600 million cards
carry one of the VISA brands and more than 14 million locations accept VISA

American Express

The world's favorite card is American Express Credit Card. More than 57 million
cards are in circulation and growing and it is still growing further. Around US $
123 billion was spent last year through American Express Cards and it is poised
to be the world's No. 1 card in the near future. In a regressive US economy last
year, the total amount spent on American Express cards rose by 4 percent.
American Express cards are very popular in the U.S., Canada, Europe and Asia
and are used widely in the retail and everyday expenses segment.

Diners Club International

Diners Club is the world's No. 1 Charge Card. Diners Club cardholders reside all
over the world and the Diners Card is a alltime favourite for corporates. There
are more than 8 million Diners Club cardholders. They are affluent and are
frequent travelers in premier businesses and institutions, including Fortune 500
companies and leading global corporations.

JCB Cards

The JCB Card has a merchant network of 10.93 million in approximately 189
countries. It is supported by over 320 financial institutions worldwide and serves
more than 48 million cardholders in eighteen countries world wide. The JCB
philosophy of "identify the customer's needs and please the customer with
Service from the Heart" is paying rich dividends as their customers spend
US$43 billion annually on their JCB cards.

Grace / Interest Free Period

The number of days you have on a card before a card issuer starts charging you
interest is called grace period. Usually this period is the number of days between
the statement date and the due date of payment. Grace periods on credit cards
are usually 2-3 weeks. However, there is likely to be no grace for balances
carried forward from previous month and fresh purchases thereafter if any.

The following are some of the varieties of credit cards in India

• ANZ - Gold
• ANZ - Silver
• Bank Of India - Indiacard
• Bol - Taj Premium
• Bol - Gold
• BoB - Exclusive
• BoB - Premium
• Canara Bank - Cancard
• Citibank - Gold
• Citibank - Silver
• Citibank WWF Card
• Citibank Visa Card for Women
• Citibank Cry Card
• Citibank Silver International Credit Card
• Citibank Women's International Credit Card
• Citibank Gold International Credit Card
• Citibank Electronic Credit Card
• Citibank Maruti International Credit Card
• Citibank Times Card
• Citibank Indian Oil International Credit Card
• Citibank Citi Diners Club Card
• HSBC - Gold
• HSBC - Classic
• ICICI Sterling Silver Credit Card
• ICICI Solid Gold Credit Card
• ICICI True Blue Credit Card
• SBI Card
• Stanchart - Gold
• Stanchart - Executive
• Stanchart - Classic
• Thomas Cook Standard Chartered Global Credit Card

Standard segregation of credit cards

• Standard Card - It is the most basic card (sans all frills) offered by issuers.

• Classic Card - Brand name for the standard card issued by VISA.

• Gold Card/Executive Card - A credit card that offers a higher line of credit
than a standard card. Income eligibility is also higher. In addition, issuers
provide extra perks or incentives to cardholders.

• Platinum Card - A credit card with a higher limit and additional perks than
a gold card.

• Titanium Card - A card with an even higher limit than a platinum card.

The following are some of the plus features of credit card in India
• Hotel discounts
• Travel fare discounts
• Free global calling card
• Lost baggage insurance
• Accident insurance
• Insurance on goods purchased
• Waiver of payment in case of accidental death
• Household insurance

Some facts of credit cards

• The first card was issued in India by Visa in 1981.

• The country's first Gold Card was also issued from Visa in 1986.

• The first international credit card was issued to a restricted number of

customers by Andhra Bank in 1987 through the Visa program, after
getting special permission from the Reserve Bank of India.

• The credit cards are shape and size, as specified by the ISO 7810
standard. It is generally of plastic quality. It is also sometimes known as
Plastic Money.

• What does Grace / Interest Free Period Mean?

• What is implied in Cash Advance?

• How to make payments from Dubai to the already existing Citibank cards
in India. How to avail of the statements to know the current bank balance
of each card. Is online facility available?

• Can I use my Global credit card on the net to pay some US company for
web hosting charges? or I have to obtain permission from RBI. If any
permissions are needed, How to get them?

• How will I know if my Credit Card application has got approved?

• How will I know if my Credit Card application has got declined?

• What to do if Credit Card is Lost or Stolen?

What does Grace / Interest Free Period Mean?

The number of days given to you on your card before the card issuer starts
charging you interest is called grace period. Generally the grace period is the
number of days between the statement date and the due date of payment.
Grace periods on credit cards are usually 2-3 weeks. However, there is likely to
be no grace for balances carried forward from previous month and fresh
purchases thereafter if any.

What is implied in Cash Advance?

Cash advances on Credit Cards are convenient and the easiest facility to utilise.
Manority of the banks in India charge a transaction fee as well as service fee /
interest charge on cash advances. This service fee accrues from the date of the
advance (as soon as you receive the cash) to the date of full payment. The
charges varies from banks to banks. Cash advance facility is a part of the overall
credit limit

assigned to a cardholder. The limit is of cash acvance is always lesser than the
borrowing limit or the credit limit.

How to make payments from Dubai to the already existing Citibank cards
in India. How to avail of the statements to know the current bank balance
of each card. Is online facility available?
According to RBI " Resident Indians may be nominated as additional/add-on
card holders by non-residents. However, the non-residents from their foreign
currency funds should meet claims arising out of use of such cards by residents
only.In cases where the cards have been arranged by NRIs these liabilities may
be met out of NRE/FCNR accounts in India also. Under no circumstances will
any remittance be allowed by residents from India to settle their claims against
use of such additional/add-on cards". NRIs get rupee credit cards which are
valid for use in India, Nepal and Bhutan.

Can I use my Global credit card on the net to pay some US company for
web hosting charges? or I have to obtain permission from RBI. If any
permissions are needed, How to get them?
The RBI's exchange control manual mentions that 'International Credit Cards'
can be used for "Registration of Internet domain name, hosting charges for
website/home pages overseas and access fees for Internet related services
through website". Before using your Global Credit Card on the net for web
hosting charges, you further clarify the aforesaid issue or seek permission from
your card issuer. Even get in touch with the card issuing bank or organisation
directly for such clarifications.

How will I know if my Credit Card application has got approved?

It is suggested to give your mobile number and e-mail id at the time of
application for the Credit Card. This will help the issuer to intimate you either
through SMS or through e-mail with the approved status of your application. You
will also receive a letter by post informing you of the Card approval. You should
be receiving your Card around the same time as the approval letter.

How will I know if my Credit Card application has got declined?

You will receive a letter from the Bank even if your application for Card is not
approved. If in case there is a further information of missing documents, you will
be sent a letter asking for the same. Then you need to fulfil with the documents
to the specified address.

What to do if Credit Card is Lost or Stolen?

Report the loss or theft of your credit cards to the card issuers to the earliest
through their 24-hour helpline service. Follow up your phone calls with a letter.
Include your account number, when you noticed your card was missing, and the
date you first reported the loss.

After doing these, check your homeowner's insurance policy to see if it covers
your liability for card thefts. If yes its fine otherwise change your policy to include
this protection.

Before the intimation, different banks have their own limit of loss bearing by the
card holder. After the intimation, it is the bank who bears the loss if any amount
is spent.

Life is Easier With Plastic Money

As the cities of India are getting a cosmopolitan touch day by day, the malls
spanning huge scope and the world class brands making India their most
favoured hub, new reasons for shelling out money have also taken birth. The
huge plazas and shopping complexes displaying varied, alluring collection of
goods make us forget everything. The rise in the living standards has also given
a way to lavish expenditures.

The past decade has seen an escalation in the standards of the Indian cities
especially the metros. The multinational companies establishing their foothold in
India have helped the majority of Indian population to not only make their both
ends meet but also to make a luxurious living in return of their service. More
earning means more spending. This is how credit cards evolved themselves.

The etymology of credit cards is no doubt impressive and but a credit card can
ransack your funds totally if not used sensibly. Let us throw some light on the
usage and procurement of instant approval credit cards.

The importance of plastic money in today’s scenario

1. Introduction
2. Age of plastic money
3. Investment avenues
4. The origin of credit cards
5. History of credit cards
6. The functions of credit cards
7. Salient features of credit cards
8. Advantages and disadvantages of credit cards
9. Major types of credit cards
10.The need for credit cards
11.Risks involved in the credit card business
12.A study on citibank credit cards
13.A study on ICICI bank credit cards
14.A study on HDFC credit cards
15.Meaning and functions of a debit cards
16.Advantages and disadvantages of debit cards
17.Rise and usage of smart cards
18.Market survey, data collection and interpretation of the

Abstract : Theses ...

Financial cards witnessed a robust growth in India in 2002-03. The number of
cards in circulation increased by almost 50 per cent. The growth in
transaction value, at 95 per cent, was even more spectacular. These results
are attributable to the thriving economy which led to a large increase in
disposable income for mid- and high-level income groups in urban and
metropolitan areas. Consumers were not only more open to the possibility of
owning a financial card, but were also more than willing to use their cards to
settle dues. The status symbol aspect of owning and using cards, too, played
its part in bringing about such robust growth over the space of a single year.
Debit cards, in particular, proved immensely popular. The number and
transaction volumes of all types of financial cards grew substantially
between 2002 and 2003. But it was debit cards that played the pivotal role.
Consumers preferred debit cards because they were wary of winding up
spending more than they could afford. Another contributing factor was the
quiet but aggressive promotion campaign launched by key `producers' in
this sector. The growth of credit cards in number and transaction volumes in
India was low compared to other countries in the Asia-Pacific region. But
there is definitely room for further growth. Debit cards, too, have yet to
realize their full potential. Among the factors that limited growth was the
comparatively slow rate of growth of ATMs in India. This is not the way most
Indians perceive this issue, but cross-country statistics very definitely bear
out the position as stated in the Executive Summary of a $1400-report on
`Financial Cards in India'. It is, however, expected that this constraint to
further growth will ease up in the near future as the advent of ever-new
technologies drives down the costs of opening and operating terminals. In
the meantime, the trend in India has been to greatly enhance the networking
of ATMs. Cards issued by one bank, are increasingly accepted by ATMs
owned and operated by other banks, on the payment of a small fee. This,
incidentally, is true of debit cards as well; not only of credit cards. A large
number of cardholders, however, remain unaware of this development. Debit
cards issued by, say, HSBC, can be used at all `Visa electron' enabled ATMs,
including those belonging to Citibank and HDFC bank. HSBC debit card
drawals on HDFC Bank terminals cost only Rs 55. If, on the other hand, you
merely wish to check the balance in your account, you can do so for a mere
Rs 15. Credit cards are often used for `big ticket' spending in India, like
dining at 5 star hotels, and purchasing (often reimbursable) air tickets.
Industry sources believe that in future credit cards are also likely to be used
in a big way for the payment of school fees, and hospitalization expenses.
Projections for the 2003-2008 period, the number of financial cards in
circulation will register a compounded annual growth rate of nearly 51 per
cent. These estimate, however, seems conservative, representing as it does
only a 2 per cent increase over the growth between 2002 and 2003. Debit
cards are expected to continue to spearhead the growth of financial cards in
terms of the number of cards. Though, for a variety of reasons, this may not
be the case in terms of transaction volumes.

More abstract from The importance of plastic money in

today’s scenario
They began appearing a decade ago in gas stations. Then in convenience stores and
supermarkets. By the end of 1996, terminals that accept payment by debit card will be in
post offices throughout the country. The U.S. Postal Service has awarded a contract to
NationsBank Corp. to put the machines into 33,000 post offices. As part of this program,
the Postal Service also will allow customers to pay for purchases with VISA and
MasterCard credit cards. The contract, which calls for installation of 50,000 terminals,
has been greeted with delight by regional networks that link the electronic terminals and
The sector of plastic money has been an upward trend in India. There are various players
in India which have given boost to there sector namely, Standard Chartered, State Bank
o India, Bank of Baroda, Citi bank, ICICI Bank, HSBC etc. The different facilities
offered by different issuers have lured the consumers. Today with increase in
competition issuer is becoming more and more liberal in order to tap more and more
customers. However an attempt to increase business by means of being liberal has
proved to be un- lucrative as it has given rise to mounting of bad debts to the issuer.

The protection offered to debit card fraud is similar but with a few exceptions. For
example, your liability under federal law is limited to $50, the same as for a credit card,
but only if you notify the issuer within two business days of discovering the card's loss
or theft. Your liability for debit card fraud can jump up to $500 if you don't report the
loss or theft within two business days And if you are the type of person that gives a
passing glance to your monthly bank statement, you could be totally liable for any
fraudulent debit card charges if you wait 60 days or more from the time your statement is

Ah the temptations of a credit card. The more you have the richer you are?? The glory is
oh so painfully short lived. One careless extravagant moment and you could spend the
rest of your life paying for it. So keep those urges down. Limit yourself to ONE credit
card that you use in case of emergencies or in cases where the only payment method is
your credit card. Having said all the above, here’s the parting shot. Credit can be your
maker or breaker.

These banks take about a month to replace the missing card. To combat this, banks have
started the Photocard Option which provides the photograph of the cardholder on the
card. They are also providing information about the lost/stolen cards through the Hot
Card Bulletin which is continuously upgraded and sent to merchant establishments to
provide them with the current status. But the success of this measure is debatable. A
majority of the credit card losses are skewed towards the issuer as the risk on the cards is
carried by the issuer.
As the name suggests, the instant approval credit cards are obtained in a small
time frame with less hassles and formalities. These cards are basically put to
use for paying off the electricity bills, phone bills and for other expenses like
refilling your car etc. The only reason which makes the procedure for procuring
an instant approval card is that the operations are done completely online. The
application form is filled and submitted online and the notifications are given
through mails. This makes the procedure quick.

Another factor that can get you instant approval is the availability of a co-signer.
A co-signer can be a person who can take the guarantee of your credibility. If the
co-signer is from an impressive background or occupation, for e.g., a
government employee then the card will be in your hands more or less within a
week. This way the bank or the card lending company also feels assured that
the money is in safe hands and the chances of the amount going astray are

The idea of carrying instant cash in the form of a plastic card for all your needs is
of course quite tempting but one must bear in mind that he should analyse his
financial conditions as to whether or not the repayment of the amount is within
his reach. Using the credit card blindly is the last thing for a wise man to do.

One of the basic deciding factors of getting a credit card approved is your credit
history. A bad credit history can make the chances of getting approval for the
card bleak or even far from possible. Customers who have a credit grade
ranging from good to excellent can get approval in almost no time.

While browsing the Internet, you will come across scores of advertisements for
credit cards. Hundreds of thousands of companies declare their efficiency in
providing the credit cards without making the customer wait. But it is the duty of
the customer to compare credit card interest rates and other factors that hold

The rate of interest of the cards should not be high to such an extent that you
end up getting stuck in the process of repaying the amount. The terms and
conditions of the company should be flexible. However no matter how much hard
a person tries to save himself from the financial crunch, there comes a month in
everybody's life when he or she becomes late in paying off the bills. That may be
due to lack of funds, or the payment date might have slipped off your mind, or
may be because of your tight schedule you fail to find time to repay the debts. It
is advisable to note carefully the penalty imposed on late payment. It should not
be too harsh for your own good. Reach a higher level of satisfaction with an
instant approval credit card.

Ebook Factors Affecting the Probability

of Credit Card Default and the Intention
of Card Use in Turkey
Changes caused by technological advancements have entered all aspects of human life.
A technological achievement that has been introduced into daily life is the use of credit
cards as a tool for payment. The use of credit cards has increased substantially
worldwide in recent years and is replacing currency as a method of payment.
Use of plastic cards as a payment instrument has dramatically increased in Turkey since
the second half of 1990s. There are 21 banks that provide credit cards to their costumers;
while the number of credit cards in circulation is 10,045,634 in 1999, it reached to
30,438,883 in 2006; the number of pos devices is 1,196,597 in 2006; and the total
amount of purchases and cash advance is 88,628 million New Turkish Liras (60,087
million USD) at the end of 2005 (Interbank Card Center, BKM).
For the general economy and the card holders, there are many advantages of using credit
card as a payment instrument such as eliminating the risk of lost or stolen, fulfilling the
cash need, providing the possibility of purchases and cash withdrawal anywhere in the
world, increasing the number of customers for merchants, reducing the need of cash
circulation and letting all money transactions are registered into the economical system
(BKM). Cohen (2005) stated that the force that affects the economy in the developed
countries is now especially the purchases done with credit cards when compared to
individual saving which can be also considered to be true for the developing countries.
According to Warren and Warren-Tyagi (2003) credit cards provide temporary
opportunities for people to continue their life standards when their income is not
sufficient. Beside the benefits of using the credit cards; there are negative sides for a card
As credit card and other debt spirals at a society level in Turkey, it brings with it many
socioeconomic problems such as divorcing, filing for bankruptcy, committing suicide
and killings of family members. For instance, while the number of people who did not
pay their credit card debt was 11,829 in 2001, it reached to 182,076 in 2006 (TCMB).
On the average, almost 836 and 13,985 people did not pay their debts each month and
faced legal procedures in 2000 and 2005, respectively. The number of committing
suicide related to the credit card debts in 2006 was 75 and 41 of those lost their lives
(Consumers Commission, 2006).
Since socioeconomic consequences of credit card debt have become one of the most
common problems in the country, the problem has received widespread attention of
media, public policy makers, card issuers and holders and consumer protection agencies.
Within this context, it is important to know which factors have impact on the probability
of default and intention of credit use as a financial solution during economic hardship.
It has been argued that personal attitudes play an important role in indebtedness. A
person who has a positive attitude towards credit card use is more likely to have more
than one credit card and have a significant amount of debt (Chen and Devaney, 2001;
Davies and Lea, 1995; Hayhoe, Leach, and Turner, 1999). From this perspective, it is
also important to identify the factors play a role in the formation of intentional behavior
towards credit card use.
There are two aims of this study. First, determining the factors affecting the probability
of credit card default; and second, determining if the subjective beliefs, the attitude
toward behavior and perceived behavior control, and socio-economic and demographic
factors have any explanatory power in the formation of behavioral intention of financing
the expenses with credit cards. Ordered probit and structural equation models based on
TpB model are used to meet these objectives. The following sections of this paper
involve literature review, data and method where the data and model were defined,
empirical findings and finally summary and conclusions.